First-quarter fiscal 2010 results announced by Peregrine Pharmaceuticals

Sep 3 2009

Peregrine Pharmaceuticals, Inc. (Nasdaq: PPHM) today announced financial results for the first quarter of fiscal year (FY) 2010 ended July 31, 2009. Total revenues for the first quarter of FY 2010 increased 345% to $6,750,000, compared to $1,517,000 for the comparable prior year quarter. This increase was primarily generated from increased government contract revenue and from increased sales by Avid Bioservices, the company's wholly owned contract manufacturing subsidiary.

Avid generated manufacturing revenues of $2,070,000 for the first quarter of FY 2010, compared to $1,193,000 for the comparable prior year quarter, an increase of 74%. The increase in Avid revenues reflects increased manufacturing services provided to third-party customers during the quarter. In addition to manufacturing revenues, Peregrine generated revenues from services provided under its contract with the U.S. Defense Threat Reduction Agency for the Transformational Medical Technologies Initiative (TMTI) to evaluate bavituximab as a potential broad-spectrum treatment for viral hemorrhagic fever infections. Government contract revenues were $4,671,000 for the first quarter of FY 2010, compared to $324,000 for the prior year quarter when the government contract work had just begun.

Total costs and expenses in the first quarter of FY 2010 were $8,940,000, compared to $6,677,000 in the first quarter of FY 2009, an increase of 34%. Costs of contract manufacturing, which increased to $1,073,000 in the first quarter of FY 2010 from $903,000 in the prior year quarter, were directly driven by the increase in Avid revenue. Research and development (R&D) expenses increased to $6,074,000 in the first quarter of FY 2010, compared to $4,068,000 in the prior year quarter, an increase of 49%, primarily due to increased R&D costs incurred under the government contract combined with increased costs associated with the advancement of Peregrine's clinical programs. Selling, general, and administrative (SG&A) expenses increased only slightly in the first quarter of FY 2010 to $1,793,000, compared to $1,706,000 in the first quarter of FY 2009.

The consolidated net loss of $2,428,000 or $0.01 per basic and diluted share in the first quarter of FY 2010 represented a 52% decrease compared to the consolidated net loss of $5,086,000, or $0.02 per basic and diluted share for the same prior year period. At July 31, 2009, the company had $12,778,000 in cash and cash equivalents.

"I am pleased to report that the momentum we achieved in all elements of our business in the last fiscal year has continued into fiscal year 2010," said Steven W. King, president and CEO of Peregrine. "We have continued to successfully advance the bavituximab and Cotara cancer clinical trials that are the key value drivers for Peregrine. Since the start of the new fiscal year, we completed patient enrollment in two bavituximab clinical trials and presented positive interim data from both studies at ASCO, in addition to reporting positive clinical data from our ongoing Cotara clinical studies at the Society of Nuclear Medicine 2009 Annual Meeting. We also continued to make excellent progress in our work under our TMTI government research contract worth up to $44.4 million to develop bavituximab for the treatment of viral hemorrhagic fevers (VHF), while our collaborators at UT Southwestern Medical Center were awarded a significant grant from the National Institute for Allergies and Infectious Diseases (NIAID) for an expanded study of additional PS-targeting antibodies as potential treatments for VHF. The awarding of the new NIAID contract is another important outside validation of the broad-spectrum anti-viral potential of our PS-targeting technology platform."

Mr. King added, "In all three of our bavituximab cancer Phase II trials, bavituximab in combination with chemotherapy has demonstrated encouraging signs of anti-tumor activity in patients with advanced breast and lung cancers. All three trials surpassed the requisite efficacy criteria for expansion of patient enrollment. These trials, along with recent completion of planned enrollment in our U.S. Phase I bavituximab cancer study, are helping to set the stage for advancing bavituximab toward additional clinical trials. As we plan for these trials, we are very pleased to be working with noted cancer clinical researcher Dr. Bruce Chabner, clinical director of Massachusetts General Hospital Cancer Center, who is serving as a clinical advisor on the design of these next clinical trials."

Mr. King continued, "During the first quarter, we completed an agreement with Affitech A/S, sublicensing them certain rights to develop the selective anti-VEGF antibodies produced in an earlier collaboration. This agreement provides us with upfront and potential milestone payments and royalties, and is an excellent example of how we intend to continue leveraging the non-core technologies that are part of Peregrine's asset base. We also reported outstanding financial results for the quarter, growing revenues 345% and reducing our net loss by more than half. Our revenue growth reflects the success of our federal government R&D contract work and continued growth in our contract manufacturing business, Avid. We announced last week that we have expanded the management team at Avid to help manage and sustain this growth."

Mr. King concluded, "These achievements since the end of the last fiscal year have enabled us to continue to build significant value in our oncology clinical pipeline, to grow the value of our contract manufacturing business and to realize immediate value from our bavituximab anti-viral platform through our TMTI government contract work. Planning for the exciting next phase of our bavituximab oncology program has already begun. With seven ongoing clinical trials on track to generate additional data in the coming months, Avid Bioservices focused on continued growth and our government-supported anti-viral research contract proceeding well, we believe Peregrine is well positioned to continue building the momentum we have achieved in the first quarter of this new fiscal year."